According to ING, it make no sense to pretend to know how the economy will evolve over the next 12 to 18 months. In this fast-moving environment, ING rather thinks in scenarios.
ING have developed four scenarios of how the virus, the lockdown measures and consequently the different economies could evolve. The main aim is not to fully predict reality, but to provide a benchmark for both the extremes and the middle-ground. In each case, ING includes some possible health factors that may be driving the scenarios. These are not meant to be interpreted as forecasts though.
We aso recommend to join our event: Economic - bring your own lunch - briefing on 15 April, with ING's Chief Economist in the Czech Republic, Jakub Seidler.
Scenario 1: base case. This scenario assumes the lockdown measures will be eased towards the end of April, going into May. This would lead to a U-shaped economic recovery.
Scenario 2: The winter lockdown returns. This is a variation of the base case scenario. In this scenario, after the lockdown measures have been eased, the virus returns in the autumn and despite more widespread testing efforts and contact tracing, the new spread pushes most economies back into lockdown: the W-shape recovery.
Scenario 3: The 'best' case scenario. This scenario assumes that after the lockdown measures have been eased, the virus does not make a comeback, leading to a V-shape recovery, primarily because of government support measures taken.
Scenario 4: The 'worst' case scenario. The assumption is here that the lockdown measures will take until the end of the year with things returning to more or less normal in Q2 of 2021. This is the L-shaped economic recovery scenario.